WWW. NYLJ.COM
MONDAY, FEBRUARY 25, 2013
By RoBeRt S. FRiedman
and maRk e. mcGRath
A
dvances in technology continue to have
an interesting and quixotic effect on the
way in which courts grapple with personal
jurisdiction. Commercial interaction across state
and international borders continues to challenge
the traditional analysis of minimum contacts and
purposeful availment. Since our 2009 article1
updating the jurisprudence relating to electronic
contacts, New York courts have continued to
use the sliding scale of interactivity to deter-
mine whether websites can provide a basis for
personal jurisdiction, along with the traditional
indicia of doing business, namely, the totality of
connections with New York. The result is that
personal jurisdiction analysis has become even
more fact specic and unpredictable.
Updated Progeny of ‘Fischbarg’
The New York Court of Appeals’ decisions in
Fischbarg v. Doucet2 and Deutsche Bank Securi-
ties v. Montana Board of Investments3 remain
the seminal cases in New York on whether elec-
tronic communications are sufcient to exercise
personal jurisdiction over a non-domiciliary.
Golden Archer Investments v. Skynet Financial
Systems4 is another example of how an out-of-
state defendant can be subject to personal juris-
diction based on communications with New York
residents. In Golden Archer, the plaintiff, a New
York entity, began negotiating the terms of a
contract to develop a securities-trading program
that would be hosted on the plaintiff’s servers in
New York. The negotiations were done through
email, Internet-based video chats and telephone
calls as well as an in-person meeting in Chicago.5
Ultimately, the parties executed a contract for
the development of the software program in
September 2010. The parties also negotiated a
condentiality agreement containing an arbitra-
tion clause designating New York as the forum
in the event of a breach of that agreement.6
Between Oct. 1, 2011 and April 2011, the parties
communicated regularly about the project via
email, Internet-based video conference and tele-
phone. Skynet’s programmers regularly logged
onto the plaintiff’s servers to upload, edit and
test the software. Other than remotely access-
ing the plaintiff’s servers, the defendants never
visited New York to meet with the plaintiff or
work on the project.7 In April 2011, Skynet esti-
mated it would take an additional four months
to complete the project. The plaintiff refused to
make any further payments, so Skynet ceased
working on the project.
Subsequently, plaintiff commenced the action
in the New York Supreme Court and the defen-
dants removed the case. Thereafter, the defen-
dants moved for lack of personal jurisdiction.
Relying on Fischbarg, Judge Richard J. Sullivan
held that Skynet “projected itself into New York
‘to engage in a sustained and substantial trans-
action of business.’”8 Skynet argued that remote
RobeRt S. FRiedman is a partner in Sheppard Mullin Rich-
ter & Hampton’s business trial and white collar practice
groups in New York. maRk e. mcGRath is an associate in
the business trial and intellectual property practice groups.
A NEW YORK LAW JOURNAL SPECIAL SECTION
Litigation
Litigation
Personal Jurisdiction
From E-Contacts
Remains
An Unpredictable Issue
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